Bawa Gurmukh Singh & Co. V. The Income Tax Officer and another

CWP/16024/2010

AI Insights

The case involves M/s Bawa Gurmukh Singh & Co., the petitioner, who sought the return of books of account and other documents impounded by the Income Tax Officer during a survey under Section 133A of the Income Tax Act, 1961. The petitioner argued that the retention of these documents for an extended period without valid reason was unjustified and hindered their ability to conduct an audit and file returns. The respondents contended that the documents were necessary for further investigation and completion of assessment, and that the Chief Commissioner's approval for their retention was obtained. The court found merit in the petitioner's arguments, citing a similar case (Spring Dale Educational Society) and directed the release of the documents under specific conditions.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 796706 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-09-2010
• Assessment Year: misc
• Other Referred Cases: U.K. Mahapatra and co. & others v. I.T.O. & others [2009] 308 ITR 133, Spring Dale Educational Society v. Union of India & others [2001] 247 ITR 409, Asstt. Commissioner of Commercial Taxes & others v. Ruchi Soya Industries & others (2008) 11 SCC 49
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUKANT GUPTA
• Assessee Lawyers: K L GOYAL; SANDEEP GOYAL
• Keywords: Books of account; Chief Commissioner; Documents; Judicial review; Survey; Impound
• Section: 44AB; 133A; 271B; 133A(3)(ia)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.16024 of 2010 & connected case being CWP No.16027 of 2010 Date of decision: 21.9.2010 M/s Bawa Gurmukh Singh & Co. -----Petitioner. Vs. The Income Tax Officer & another. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. K.L. Goyal, Sr. Advocate with Mr. Sandeep Goyal, Advocate for the petitioner. Mr. Sukant Gupta, Advocate for the respondents. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of C.W.P. Nos.16024 and 16027 of 2010, as both the petitions involve common question. 2. C.W.P. No.16024 of 2010 seeks a direction for return of books of account and other documents impounded on 17.3.2010 during survey of premises of the petitioner under the provisions of Section 133A of the Income Tax Act, 1961 (for short, “the Act”). CWP No.16024 of 2010 3. Case of the petitioner is that the Income Tax Officer conducted survey in the premises of the petitioner under Section 133A of the Act and impounded certain documents and books of account. Section 133A(3)(ia) provides for return of books of account after 10 days unless permission to retain the same beyond the said period is granted by the Chief Commissioner of Income Tax. Under Section 44AB of the Act, the assessee is required to get books of account audited before filing of the return, in absence of which the assessee is liable to penalty under Section 271B of the Act. In these circumstances, retention of books of account for a long period was not justified. 4. In the reply filed by the Income Tax Officer, stand taken is that though the books of account and other documents were impounded, the assessee was given a choice to obtain copies of the said books of account and documents. The original books of account and documents were still required for further investigation and completion of assessment. Requisite approval of the Chief Commissioner had been duly granted on 26.3.2010. On 13.9.2010, photocopies of the documents were given to the assessee. Requirement of recording reasons was applicable at the time of impounding, which had been duly complied with and there was no requirement to record reasons for retaining the books of account and other documents. 5. We have heard learned counsel for the parties and perused the record. 2 CWP No.16024 of 2010 6. Learned counsel for the petitioner submitted that even though photocopies of the books of account and other documents have been made available, the same not being legible, audit could not be conducted on the basis thereof. The respondents already having retained the books of account and other documents for more than six months, in absence of any valid reason, the same could not be retained for unreasonably long period unless there existed reasons to justify such a course. Reliance has been placed on judgment of the Orissa High Court in U.K. Mahapatra and co. & others v. I.T.O. & others [2009] 308 ITR 133 to submit that approval granted by the Chief Commissioner should be communicated to the assessee. Alternatively, books of account and documents be returned on appropriate conditions for some period as was the course adopted in Spring Dale Educational Society v. Union of India & others [2001] 247 ITR 409. 7. Learned counsel for the revenue submits that only statutory requirement was to record reasons at the time of impounding and to seek approval for retention beyond 10 days, but there was no requirement to convey the reasons for the approval of the assessee. Reliance has been placed on judgment of the Hon’ble Supreme Court in Asstt. Commissioner of Commercial Taxes & others v. Ruchi Soya Industries & othersb (2008) 11 SCC 49. It was also submitted that approval 3 CWP No.16024 of 2010 for retention of books of account has been granted upto 31.3.2011. 8. Question for consideration is whether mere recording of reasons and approval by Chief Commissioner was enough to retain the impounded documents for long period even when it results in prejudice to the assessee. 9. We are of the view that even though the officer conducting survey could impound the books of account or other documents and retain the same beyond 10 days after approval of the Chief Commissioner, the said power is not an absolute power. It is subject to judicial review like any other discretionary power of an administrative authority. 10. Learned counsel for the petitioner submits that since photocopies are not legible and books of account and documents have already been retained for more than six months, the petitioner should not be denied opportunity to get the audit conducted and file the return. 11. We find merit in the contention. In Spring Dale Educational Society, this Court gave following direction:- “.....The concerned authority of the Income-tax Department is directed to release the books of account and other documents seized on May 21, 1998, from the premises of the school of the petitioner within one month of the presentation of a certified copy of this order. It will be open to such authority to retain photostat copies of the documents after getting them signed by the representative of the petitioner, 4 CWP No.16024 of 2010 who shall certify the same to be true copies. The petitioner shall make available the original documents as and when required by the competent authority or any court.” 12. We are of the view that similar direction is called for in the present case. 13. Accordingly, we direct respondent No.1 to release the books of account and other documents within 15 days from the date of receipt of a copy of this order. Respondent No.1 will be at liberty to retain photocopies of the documents after getting the same signed by the representative of the petitioner who will certify the same to be true copies. The petitioner will return the original documents within two months thereafter. Period of filing return and audit will stand extended by two months from the date of availability of the original books of account and other documents. 14. A photocopy of this order be placed on the file of other connected case. (ADARSH KUMAR GOEL) JUDGE September 21, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 5 "